Monthly Archives: December 2016

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Accounting Finance

At the core of any successful business is a well organized management. Financial accounting is a very important tool for business. Aside from knowing strategies such as bookkeeping, marketing, advertising and production, a good and stable business must also have a competent system for accounting finance.

Whether you like it or not, accounting finance is one thing you cannot dispense with in the world of business. It is a very important tool in determining where and how exactly your money is being spent. Also, it is most important in terms of taxes and other pecuniary obligations.

Good Accounting Means Good Business

Accounting ensures you how much you have, how much you owe, and helpful in assessing the value of your business. Are you generating any profit or operating at a lost? Accounting records will answer your questions. Accounting serves as the proper recording tool of the financial status of any business. Fiscal dealings are best kept right on track with an effective accounting department.

A good accounting system within one’s business is a great help in making business decisions. This also shows how credible you are with other companies. Accounting does not only place you in a very knowledgeable stance, but it gives you that confidence by being armed with the facts and figures revolving around your business. Knowledge is power.

Professional Accountants

It is to your advantage if you are an accountant by profession. But if not, you can still do your own accounting if you are operating a small-scale business. However, if you have a big company it is advisable to hire a professional accountant especially if you do not have the time and the skill for it. You must realize that there are various strategies in keeping various kinds of accounts in a business.

It is also best to check the accounting firm’s competence, credibility and confidentiality issues. It is very important that in any business, you would be able to trust your accountant with sensitive information, including profits and sources of income your business is accumulating.

Accounting standards you should know

To the untrained and unsuspecting eye, accounting principles might seem hard, intimidating and complicated, but it is in reality very simple if you get past all those figures. All you have to know in accounting are these: Accounts are always divided into three types, namely assets, liabilities and equity. Each account is unique and simple yet forms part of the very foundation your business is operating on.

“T” accounts can be managed by drawing a T like figure with a left and right section divided by a vertical line. On the left side, you can place all your debits or the so called assets. On the other side, you can list down all your liabilities or what we call credits.

The general rule is that for every liability, there must also be a corresponding asset so that a balance will be achieved. If the credit is more than your debit then perhaps you are already generating a loss in your business.

Mastering these simple accounting principles will help you in determining where your business stands. You will also be more confident in presenting these financial records even if federal agents pay you a visit for an audit. GP

Cloud Accounting Benefits That Will Keep Your Business Growing

If you are looking for an efficient and more effective way of managing and tracking your business financial transactions, you may want to consider putting your financial data in the cloud or using a cloud accounting system.

The cloud is basically a term used to refer to the internet. And cloud accounting is an efficient method of managing your business online. Instead of storing your data on your local computer, you store it in the cloud so you can access it anytime and anywhere you are in the world. You simply login to software found in any search engine site or to your local computer software.

Cloud accounting is a revolutionary tool that can help businesses, especially startups and small to medium enterprises, grow and realize their full potential.

But it is not always easy to change to something new, especially if it could greatly affect the future of your business. So here are some benefits of cloud accounting that you need to consider if you want your business to be successful.

It is very flexible, reliable and easy to access.

Cloud accounting allows you to access your data anywhere you are and anytime you want, as long as you have an internet connection and an internet connected device to use. You don’t need to go to your office and log in to your traditional accounting system any more. Cloud accounting allows you to work even from the comfort of your own home.

It offers real-time financial reporting.

One of the revolutionary things that cloud accounting offers, is provision of automatic transaction updates and real-time financial reporting, whichever accounting software you are using. You don’t need to wait for weeks or months before you get your financial reports because everything is updated in the system as soon as there are changes made or information is added. This helps you save so much time that you can use to focus on running your business.

It increases accuracy.

When you use any kind of cloud accounting software, you don’t have to duplicate your data entry. This means that some possible human error is eliminated, increasing the accuracy of your financial reports. Access to accurate and timely balance reports is one of the key benefits of cloud accounting that can positively improve business.

It improves collaboration.

Using any kind of cloud accounting software allows you to add users. With this, collaboration with your other team members including your Chartered Accountant is easier and faster. No matter where they are, as long as they are logged in to the system, you can work with them real-time.

It is very cost-effective.

You don’t need to buy new IT equipment or upgrade your old equipment. Also, version upgrades and the like are already included in the fixed monthly fee you pay. This helps you save money and time. Scalability is also handled very effectively as most systems include unlimited users. Finally, if you decide to stop trading, then it is simply a matter of ceasing your subscription and monthly payments stop almost immediately. That is why cloud accounting systems are highly recommended for startups and SMEs.

It is secure.

Since everything is in the cloud or the internet, you might be thinking that information can easily be hacked or breached. Accounting software providers store your data in multiple locations with the same level of security as internet banking. You have two or more location backups so if one network fails, you can still access your account.

These are just some of the advantages of cloud accounting that can help any small business or startup manage their financial affairs and grow faster.

If you want to know more about this, you can talk to our cloud accounting experts. They can help you find the best accounting system for your business and set everything up for you.

Accounting Applications and Efficiency of a Business

Efficiency, which means producing output with maximum productivity, is what every business strives. With the resources that have been employed, any business wants to earn a maximum possible profit that can be got. While businesses may perform better with more assets (this being applicable to small and big businesses alike), they have to make do with whatever they have at their perusal.

The management makes sure the organization is run efficiently by undertaking a number of measures. It establishes the policies that are to be observed in the organization. These are directives to be followed by everyone. These establish the authority, the process for authenticating any financial transactions, time schedules that should be adhered to.

Internal controls make sure the assets are used optimally. These also ensure that the assets are safeguarded. Also, it makes sure that the financial statements are produced accurately reflecting the state of affair of the business. Efficient business has to make sure internal controls are in place.

To make sure the business is running efficiently, the management may have to take a measure of its performance. It has to make sure the business is headed in the right direction. Any changes that are needed have to be made as soon as possible. This can be done from financial statements. While these should be prepared at the end of financial year, what is needed is regular assessment of the business. Monthly or quarterly reports may work wonders when it comes to appraising the health of the business.

Management may change its internal workings if the current system is deemed ineffective. This means consulting professional accountants. This may also mean considering the size or scope of the employees. Alternative to employees, that is, automated systems may also be the solution in the quest of finding the optimum result.

Accounting applications may be used to make sure a business runs at the finest level. Not only will it make sure financial statements are prepared when the management wants it, but also that the records are kept without errors. Keeping track of employees is also done easily with accounting applications.

Time is saved by the application in many fronts: documents can be retrieved with a click, editing a document by multiple users can be done simultaneously, communicating is also facilitated. Other regular occurring activities can be tutored to be done by the management thus freeing the time to pursue a matter that the business can reap benefit from devoting their time to core business activities.

The application works with the system that the management has established, from the keeping of receipts to the hiring of capable employees thus ensuring the business is on track to effectively do what it has been established to do.

The Effects of Globalization on Both Accounting Profession and Education

Innovations in technology has catapulted the financial district into a global market. Globalization has had a large influence on the way businesses conduct business. Firms are not only responsible for being privy to information involving consumers in their own backyard but also understanding consumer culture as well as economic, political, and legal structures that exist in other countries. Due to the influence globalization has had on businesses, it has changed the expectations that are required of incoming business students and their education. More specifically, accounting students are being impacted by the changes globalization has influenced the market with.

These students are challenged more particularly throughout their undergraduate years to understand not only the rules and regulations of GAAP (General Accepted Accounting Principles) but also the standards set forth by the IFRS (International Financial Reporting Standards). Within the accounting sphere, the primary focus has been on external reporting which involve the preparation of financial statements and auditing. However, due to the ever changing world of the global market, future accountants are required to possess perspectives that influence both external and internal reporting. The market will continue to change due to the fast paced journey of information making globalization an important factor in accounting education.

Businesses in the United States have largely adopted GAAP which is a guide to how business are to construct financial information to produce statements. GAAP has been useful in the last couple of years because it facilitates the way businesses in the U.S. communicate with each other. However, in the global environment, GAAP proves to be burdensome for most companies. Overseas, they have adopted IFRS which is another guide to producing financial information which aids foreign companies with communicate amongst each other. Most countries use IFRS as a basis for the way business transactions are conducted. Since most of the world is using IFRS as the standard it leaves the U.S. with the tedious task of having to incorporate two different principles to conduct business. In the article, “How Globalization is Affecting U.S. Accountants” by Bruce Pounder, Pounder states that “U.S. accountants will find themselves at a severe disadvantage to the many foreign accounting professionals who have already mastered international accounting standards and who are therefore much better-positioned to take advantage of rapidly growing career opportunities in China, India, and other emerging economies” (Pounder, 2007, p. 3). He then goes on to predict that as GAAP becomes more overshadowed by IFRS, U.S. accountants will find their skills and knowledge becoming obsolete. Therefore, IFRS has become more integrated into the accounting curriculum for education. Students are required to understand not only GAAP but IFRS and the changes that occur when working with both. By involving IFRS into the learning process, students will be prepared to later take the CPA Exam which has recently been updated to include information about IFRS in the Financial Accounting and Reporting (FAR) section. Students are becoming better equipped with skills and information that will make them more marketable and efficient in the globalized business environment.

In the U.S. economy, a thriving financial sector is usually supported by a strong public accounting and auditing firms. Therefore, the focus over recent years has been to ensure that accountants excel at compiling information involving a company’s assets, liabilities, equity, investments, etc. However, due to globalization, external accounting practices aren’t as valued if internal practices are not also implicated. Internal practices are important because it shapes the way businesses reach their customers in the foreign market. Authors Paul Danos and Richard L. Measelle stated in their article, “Globalization of the Business Environment: Implications for Accounting Profession and Business Education”, that “In a competitive global market place, the internal accountant must be sensitive to what drives the costs of products and he/she must work with production and marketing people to rationalize all cost accounting procedures” (Danos, 1990, p. 79). The responsibilities of the internal accountant is becoming more critical to the success of businesses. For a business wanting to expand into foreign territory, cost accounting is used to accurately develop product price information, location of manufacturing facilities, picking suppliers, etc. Due to these factors, internal accountants have to be familiar with regulations across borders, tax treatments, and currency conversion costs. When it comes to public accounting, auditors must be heavily versed in global accounting standards because “the world’s economies are becoming increasingly interdependent… ” (Needles, 2010, p. 602) according to Belverd E. Needles Jr. author of the article “Accounting Education: The Impact of Globalization”. The author goes on to encourage global standards for auditors because it strengthens their practices by only having to be familiar with those regulations. In order to be well versed in the global market, accounting students are advised to take courses specifically designed to analyze different cultures, languages, and political factors that influence societies.

Globalization has influenced many changes that have taken place in both the accounting profession and education. Students are now exposed to problems that occur in the global market and how to go about solving them. Not only are these students expected to understand all the mathematics and jargon involved with the business world, but they are also expected to have a good sense of foreign consumer culture as well as the regulations bound to each country. Implemented with these skills, students will be able to excel in the new business world.